OVERNIGHT

The week ahead should prove an interesting one as the Fed minutes become public possibly shedding some light on inflation and what's the Fed's next move. Here a brief breakdown from the WSJ.

TUESDAY: Reports on price inflation in the U.S. and the health of American industries should show whether a first-quarter slump was an aberration. Industrial production—a broad gauge across U.S. factories, mines and power plants—fell in March by 0.6%, but economists surveyed by The Wall Street Journal forecast an increase of 0.3% in April. The Consumer Price Index will show whether inflation is picking up after months of subdued data. Surveyed economists predict a 0.3% rise in the index.

WEDNESDAY: Minutes from the Fed’s monetary policy committeemeeting in April could provide fresh hints to confirm—or counter—market expectations for the Fed to keep rates steady at its June meeting. Investors will be eager to see how much the Fed worries ill winds from overseas could blow the U.S. economy off course, including the risk of a U.K. exit from the European Union.

Japan risks recording its sixth contraction in three years if first-quarter gross domestic product doesn’t print a positive number. The median forecast of 20 economists surveyed by The Wall Street Journal is for inflation-adjusted growth of 0.3%, though a handful say the third-largest economy likely shrank in the first three months of the year.

FRIDAY: U.S. Treasury Secretary Jacob Lew will tell Japanese officials at a two-day G-7 finance ministers’ meeting in Japan to stop threatening to depreciate the yen amid growing currency strains between the two allies. It will be Mr. Lew’s first face-to-face meeting with his G-7 counterparts since the U.S. Treasury named Japan andGermany to a name-and-shame list in its semiannual currency report in late April. The U.S. hopes to convince Tokyo to temper its yen-intervention threats; failure to do so could signal renewed turmoil in exchange rates ahead.

Meanwhile, the Nikkei led what Monday morning was a mixed market starting with China's less encouraging data releases over the weekend. The Nikkei was up slightly less than 1.0%; the Kospi remained nearly flat and the Hang Send edged higher 0.20%. The Shanghai Composite was down slightly, 0.7% and Australia's ASX 200 was slightly up O.42%.

A RIGGED SYSTEM

For four years it continued. From 2006 to 2010.

The presiding magistrate in the case called it "persistent, prolonged and deliberately dishonest behavior." The trial lasted four months. It revolved around the charge of insider trading. A short time back current presidential front runner, Donald Trump, caught some holy hell from MSM for calling  the system "rigged." Trump, contrary to belief, wasn't just talking about the electoral process.

The bottom line, as the judge pointed out: "It was a gross breach of trust." Such gross breaches of trust are hardly limited to the financial world. Politics and MSM should come to mind immediately.

The following is from dailyspeculations.com/wordpress/?p=11047. The poll cited was done by Pat Caddel, a Democrat pollster with a reputation of being, unlike many of his peers, fair minded.

A pollster for four decades and once a pollster for former President Jimmy Carter, he has his detractors. Who doesn't? What's important is that way back in January even before the Iowa primary began he noted this election is about "insurgency," a push back against the status quo. Few especially among the elites believed it then.

72% of adult Americans believed that the country was "in decline" 60% of adult Americans thought that their children would NOT be "better off" than than they were; the same percentage thought that their parents had left them better off than their parents had been 86% of adult Americans do NOT think that they can succeed by working hard and playing by the rules; they think the rules are rigged 89% of adult Americans think both political parties are fundamentally corrupt

There have been other polls out that show similar results particularly when it comes to MSM and the two-party system.  The distrust of the status quo runs wide and much deeper than either Democrat or Republican pundits think. Their peach tree is being shaken to it roots. And the message is clear: a good number of Americans, a large number who for obvious reasons have remained silent so far, don't like and are no longer buying their peaches.

Here's an excerpt from the story as the trial ended.
 blacklistednews.com/Deustche_Bank_Brokers_Jailed_In_Biggest_Insider_Trading_Bust_

Martyn Dodgson, who was a managing director in Deutsche Bank’s corporate broking team leaves Westminster Magistrates Court in London after appearing on a charge of conspiracy.

Two former Deutsche Bank corporate brokers have been sentenced to one of the longest prison terms possible for the crime of insider trading in the UK. As US financial market participants walk free in the streets managing their own “home office” money, Martyn Dodgson and Andrew Hind will be rotting in a Wandsworth prison cell (among the worst reputed of England’s prisons) for up to four and half years for what the judge called “persistent, prolonged and deliberately dishonest behavior.” As Bloomberg reports, the group, including three other defendants, formed part of the FCA’s biggest insider-trading investigation dubbed Operation Tabernula.

The FCA accused Dodgson and Harrison of passing inside information on possible deals from their jobs between 2006 and 2010 to Hind who the agency claimed gave them to Parvizi and Anderson to trade on. All of the men denied the charge. But as Bloomberg reports, the sentences are among the longest handed down in an FCA insider-dealing case…

Martyn Dodgson, 44, was sentenced Thursday in London (to 4 1/2 years in jail)  alongside friend and accountant Andrew Hind, who was given a 3 1/2 year prison term for the same offense. The men were found guilty of insider dealing on Monday after a four-month trial.

“This was persistent, prolonged and deliberately dishonest behavior,” Judge Jeffrey Pegden said when handing down the sentence. Dodgson showed a “gross breach of trust.”

The sentences were another victory for the Financial Conduct Authority, which has won 30 convictions for insider trading since it started prosecuting the crime less than a decade ago.The success comes as U.S. prosecutors are struggling with a court ruling that limits their ability to tackle the offense.

Thirty convictions for insider trading in less than a decade sounds like more than just isolated incidents. The complaint about U.S. prosecutors not being able to tackle the problem because of a court ruling is pure smoke screen. It's a call for more centralized bullying. We will get those bad guys just give us the authority. Wall Street knows who is insider trading. They originated the game.

OVERNIGHT

 Yesterday it was Macy's. Today it was Nordstrom that reported disappointing quarterly earnings and announced it expected slower sales, causing the stock to decline 17% joining two other retailers, Macy's and Kohl's, feeling the pangs of consumers holding on to their hard won money.

A couple of stories today--one about retailers becoming like newspapers and another one about retailers hitting the recession alarm--pretty much tell the retail tale. Much of the money expected from lower energy prices didn't find it way into shopping as consumers upped their savings rates, something the pundits neither expected nor wanted ti consider.

Meanwhile, overnight Reuters reported that the Bank Of Japan issued a statement saying they
"will act decisively using its "ample" policy options if needed to achieve its 2 percent inflation target." Quoting Bank Governor Hauhiko Kuroda, they said Kuroda noted the bank would not stand still until the effects of previous easing measures prove effective.

"We will take monetary policy measures in a timely, forward-looking manner," Kuroda said,
"Risks to the economy are tilted to the downside," he said, pointing to uncertainty over the global economy, volatile financial markets and their effect on business sentiment.

The above sounded to investors like another warning sign causing the yen to soften after rallying when the BOJ decided not to sit tight. The point here is consumer spending or the lack thereof is not  just isolated to the U.S. Some have accused consumers of being the cause for a lack of a sustainable recovery and that magical 2% inflation global central bankers crave so hardily. 

Japanese stock were lower after the yen eased up after being up against the dollar falling 0.2%. Part of the problem has been the U.S. The Fed has eased off talk about interest rates of late and the outlook for the economy given the above-mentioned retail sector is hardly buoying investor spirits.


Elsewhere, the Hang Seng Index was recently off  0.9%, Australia’s S&P ASX 200 was down 0.7% and the Shanghai Composite Index was flat, according to the WSJ.

OVERNIGHT

Some might disagree but Macy's which just reported it worse earnings since the recession began could easily be a surrogate for consumers.

As the WSJ reported, Macy’s Inc. set off fresh fears about the health of the U.S. retail sector, after the country’s largest department-store chain reported its worst quarterly sales since the recession.

The company’s poor results and downbeat comments Wednesday triggered a selloff across apparel makers, mall owners, luxury brands and rival chains. Macy’s shares had their biggest drop since 2008.

“We are not counting on the consumer to spend more,” Chief Executive Terry Lundgren said Wednesday. With saving rates high, wages growing and employment data steady, Macy’s executives were at a loss to explain why consumers weren’t spending in its stores. “We’re, frankly, scratching our heads,” said Chief Financial OfficerKaren Hoguet.

Investor are concerned about the outlook for U.S. retailers, i.e., consumers and more weak earnings reports in Japan and that apparently led to Asian shares defined Thursday in early trading. The Nikkei fell 0.4%, the Korean Kospi was off 0.1% and the Australian S&P/ASX 200 dropped 0.5%.

Meanwhile, the Shanghai Composite Index slipped 0.6% while the Hang Send Index eased 0.4%. According to the Journal, The common theme in the pullback all across the Asia-Pacific region was weaker-than-expected earnings by major U.S. companies. Analysts had been hoping for a revival in consumer spending that could lift the broader U.S. economy.

Macy's was not alone. Disney also reported weak earnings as did several Japanese companies including Toyota and Bridgestone the big tire company. In the futures market gold was off $3.30 at $1,272.20 and oil down a fraction at $46.19.

MAKE BELIEVE

It's only a fiat-paper moon floating over a fiat-paper sea; if you think this isn't make believe, shame on you and me.

This is and has been an analysis-paralysis based Fed from the beginning. And all the King's horses and all the King's men and women in MSM are not going to change it.

The constant puttering with what are only disappointing job numbers recently tells you that. There is more media fudging going on about these numbers than in a fudge factory which, come to think of it, is a good description for this leaderless Fed.

This is a Fed desperately looking for some figure that will give then a clear enough--whatever that translate into--sign that will allow them to hike rates and get much of their self-inflicted heat focused elsewhere.

The Fed's delay has for the most part pulled the green curtain back and revealed a bunch of bureaucrats for what they are, indecisive economic data wonks without a clue. If these data slaves don't know by now, you can bet when they claim they do know, it should more than worry you. Think hard hats here.

The artificially kept low interest rates are a form of rent control. Once they come off you can expect to see some unexpected damage to your buying power. That's just one of the reasons you're seeing some billionaires who lived and prospered mightily most of their careers in the equity trenches come out with statements about gold. Gold is the fiat-paper-pushers worst enemy.

It's only a fiat-paper moon floating over a fiat-paper sea; if you think this isn't make believe, shame on you and me.

OVERNIGHT

Oil was the story for most equities as Asian shares seemed to take their lead from the U.S. where the DJIA moved up 222 points on what many saw as thin volume but sold off later Wednesday as concerns about China and other emerging markets continue to hold investor attention.

The MSCI's broadest index of Asia-Pacific shares outside China surrender earlier gains, down 0.2% after hitting an eight-week low on Tuesday. Hong Kong was also down 1% and the Kospi edging0.(% lower, the two market many believe are most tied to the fate of China. The major regional shining light was the Nikkei 225 owing to a weaker yen and a stronger dollar. The index rose 0.3%.

Some investors took the theme no bad news is good news, at least for now. Data out of China remains mixed, not the stuff investors are hoping for from the globe's second largest economy and much of the world growth for some time before the 2008 meltdown began. The term sustainable recovery is now part of investor lexicons.

Reuters reported: In the currency market, the yen stayed on the defensive, following two sessions of steep declines after Japanese officials stepped up their warning about intervening to weaken the currency. The yen JPY= was trading at 108.72 to the dollar, having slipped 3 percent from its 18-month high of 105.55 set on May 3.

The dollar got broad support from comments by a top Federal Reserve official last week, which kept alive otherwise diminishing hopes of a Fed rate hike following soft U.S. payrolls data on Friday. New York Fed President William Dudley said that it was reasonable to expect the U.S. central bank would raise rates twice in 2016.

Oil prices gained some support from what's going on in Canada and Nigeria as investors try to assess those situations while gold dipped as equities staged a rally in the U.S. Some call it risk on movement in stocks.

THEY SHOULD BE

 
We don't know what vat the editorial staff at the WSJ quaffs from daily, but it's clearly vintage stuff. In this case the same old stale stuff in their attempt to protect and maintain the status quo.

In today's Opinion section they featured Fred Barnes, "Trump Needs Ryan More Than He Knows," a rather weak and pathetic veiled threat that Trump must now sell out those 10 million crazies who voted for him and unify the party. It might not be PC, but let's be blunt here. The Republican Party is bankrupt. Paul Ryan at least in the eyes of many is a symbol of that bankruptcy.

It's a safe bet--what out of touch people like Fred Barnes never get--that many of those 10 million votes Trump received is because the status quo is no longer palatable, something Barnes in his article keeps harking back to with his nonsense about unifying the various wings of the party.

Barnes, a Washington insider, rolls out a few veiled threats like this gem: "Mr. Trump could wind up embarrassed by the very convention that nominates him." Given that the Republican party has been an embarrassment for years, this is hilarious. This is a party that served up George Bush, John McCain and Mitt Romney, all in the same century.

Then there is Barnes' threat that the GOP's congressional wing is wider than the members of Congress, that it is "loosely organized and exists in an orbit around Mr. Ryan. He is the architect of its agenda and is pursuing it vigorously in the House. Party elites are on his side."

Barnes proves with that little ditty he and his kind haven't got a clue. Many of those 10 million votes came from people who are sick of those party elites and want to get rid of them. Including Mr. Ryan. Barns then cites another threat if Trump fails to play ball, a third party candidate.

The party can cough up a third or fourth or fifth party candidate. It will only validate what those 10 million votes were saying all along: the GOP in its current state is an anachronism. Out of touch, out of threats and out of time.

The one thing Barnes gets correct is his assertion there's much at stake here. There sure is. And it has nothing to do with a party that's been socially insolvent for years and everything to do with the liberty, freedom of choice and privacy of those 10 million voters. And there are hordes more out there.

Paul Ryan is the water boy of the elite. The day of the neocon has come and gone. Thanks in part to the Internet people are now hip to the neocon jive: Wars, phony trade agreements, huge military-industrial complex, one world government and U.S. hegemony.

There's an old saying about being too close to the forest to see the Aspens. That's what goes on in DC. Barnes and his fellow travelers at the WSJ are too entrenched and too benighted to be embarrassed for being so out of touch. They should be.

OVERNIGHT

If you ever had a yo-yo as a kid, you have some idea of what's going on in the Nikkei: the dollar firms, stock prices rise. It weakens and shares sell off.

That's about as plain of a beggar thy neighbor play there is, though many will deny such shenanigans ever go on. Meanwhile, the dollar strengthened overnight pushing the yen lower and the Nikkei higher to a 1-1/2 week high Tuesday among investor jitters about upcoming earnings reports and future forecasts.

The Nikkei gained 1.2 percent to 16,412.88 by midmorning, the highest since Apr. 28. As expected to round out the theme, exporters led the market higher with the three major auto manufacturers, Toyota, Honds and Nissan, all advancing. One high flier was Asahi glass, up 8.5% after reporting nearly a 5% rise in operating profits.

The dollar settled at 108.29 after it strong Monday performance. That followed the yen's run sat week when it hit a 1-1/2 year high. Meanwhile, things heated up after the U.S. last week announced terms to prevent the Bank of Japan from intervening in currency markets to weaken the yen. The WSJ reported the following within the last hour:

TOKYO—Japan’s finance minister said he was “prepared to undertake intervention” in the foreign exchange market if the yen rose further and sharply, describing more explicitly than before a policy the U.S. opposes.

The comment by Taro Aso in parliament on Monday was his first direct reference to the possibility of intervention during his tenure as finance minister under Prime Minister Shinzo Abe.

Mr. Aso’s remarks added to signs of tension between the U.S. and Japan over exchange rates as both countries struggle to gain traction in the face of slowing global growth. Gains in the yen are generally a blow to Japan’s exporters, making them less competitive than their rivals in the U.S.

The comments helped push the dollar up about 1.2% against the yen to ¥108.38 in late afternoon New York trading, paring part of the dollar’s 11% fall against the currency this year through Friday.

The finance minister also broke from the protocol of keeping currency negotiations between countries under wraps to avoid feeding undue speculation. Mr. Aso disclosed how Japan’s Ministry of Finance and the U.S. Treasury Department have been at odds in private conversations over the yen’s recent appreciation.
But U.S. Treasury officials think differently, Mr. Aso said. “Their stance is that it [the rise in the yen] is still only ¥5, and we are not at a stage yet” to worry about currencies, Mr. Aso said. “We have often been arguing over the phone.”

In its semiannual currency report issued at the end of April, the U.S. Treasury placed Japan on a list of trading partners whose exchange-rate policies need monitoring. Japan has met two of the three criteria used by the department to identify a country pursuing policy that “could give it an unfair competitive advantage” against the U.S.

Investors interpreted Japan’s inclusion in the list as a U.S. call against intervention, but Mr. Aso said it was due to Japan’s trade surplus and didn’t mean the U.S. found Tokyo’s currency policy inappropriate.

Mr. Aso said the recent volatility in the yen was “not desirable” because it affects all government policy, from trade to economics to fiscal measures. “We are certainly prepared to undertake intervention” if the yen continues to make sharp movements, Mr. Aso said.

Intervention is an attempt by authorities to control exchange rates by trading their own currency in open markets. Japan last intervened in the fall of 2011, when the dollar was around 75 yen. It currently is about ¥107.50.

Mr. Aso also said the Treasury’s move to put Japan on a monitoring list “won’t constrain” Tokyo’s currency policy.Bank of Japan Deputy Governor Kikuo Iwata, also speaking in parliament, said the Treasury report wouldn’t affect the central bank’s monetary policy.

We said a private deal was recently cut to weaken the dollar and we will stand by that assertion until we see evidence to the contrary. So as more nerves get frayed we're likely get a further glimpse of the truth.

THEIR STOCK AND TRADE

This is a story about something we've been saying for a long, long time, particularly about MSM. But we make no exceptions for politicians.

 A lot of people think Las Vegas created the saying what happens there stays there. They didn't. This is a meme that dates to the first time anyone thought up the idea of politicians and that they might be good and necessary. They aren't.

Trying to keep the truth from the masses is the stock and trade of these people.  

The White House is scrambling to clean up the political mess created by a New York Times Magazine profile of President Barack Obama's deputy national-security adviser, Ben Rhodes, who offered surprisingly blunt comments about the Iran nuclear deal and other contentious topics.
In the interview, Rhodes was candid about how the administration has sought to shape its foreign policy, and went into some detail about how "Beltway insider" experts and reporters helped the White House sell the Iran nuclear deal to the general public.
The profile has sparked backlash among those who feel that Rhodes admitted to being part of a campaign to "spin" the narrative and deceive Americans into approving the landmark nuclear deal.
Rhodes' comments also angered Washington reporters, whom he characterized as "27-year-olds" who "literally know nothing" or as "handpicked Beltway insiders" who report on the White House uncritically. And he was critical of the Washington foreign-policy establishment, which he apparently refers to as "the Blob."
Rhodes responded to the criticism in a post on Medium published on Monday morning: "How We Advocated for the Iran Deal." In the post, Rhodes defended the strategies the White House used to sell the deal to the general public and protect it from its opponents.
In his daily press briefing, White House Press Secretary Josh Earnest told reporters that Rhodes was motivated to discuss the administration's communications strategy further because "there has been an attempt by opponents of the Iran deal to say that the effort to protect the deal was based solely on 'spin.'"
Jonathan Ernst/ReutersDeputy US National Security Adviser Ben Rhodes at the Washington Ideas Forum in Washington, DC, on September 30, 2015.
"I recognize that there is an attempt by those who either lied or got it wrong to re-litigate this fight," Earnest told reporters. But "time and time again, the critics of the deal have been wrong. I think that is an indication that our attempts to protect the agreement were rooted in fact. And that's what Ben wanted to reiterate in his piece."
Jonathan Karl, ABC's chief White House correspondent, asked Earnest if it is "the White House view that Hillary Clinton is part of the foreign policy 'blob'" Rhodes referred to in his interview, which he said was clearly meant as a "derogatory" term.
Earnest replied that he had never heard Rhodes use the term "blob."
"I'm not even sure what that means," Earnest said.
Earnest also told reporters that Rhodes' comment about the "27-year-old" reporters was "not meant as a put-down" of the White House press corps.
"Based on that reaction I'm confident he would say it differently if he had the chance," Earnest said.
Fox News White House correspondent Kevin Corke later confronted Earnest again about the administration's attempts to sell the Iran deal.
"Can you state categorically that no senior official in this administration has ever lied publicly about any aspect of the Iran nuclear deal?" Corke asked.
"No, Kevin," Earnest replied.

SNAP CRACKLE AND POP

 
 Want to know how bad things in China really are?

Well, you had two signs over the weekend, their trade numbers disappointed and what the WSJ, "China Bolsters Ailing Firms," noted: "China is doubling down on efforts to keep unprofitable factories afloat despite years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy."

The first thing you should know about this is the broader implication. Government bureaucrats never fix any thing unless they're forced to. The austerity program that the Germans and a few other half-way solvent EU members prefer is anathema to the kick the financial can crowd in Brussels.

The next thing is the term doubling down, an activity most traders and gamblers understand. Some would call it risking good funds after investing previous bad ones. The Keynesian crowd just never gets it. Keynes was supposedly noted for his remark in the long run we're all dead. Well, in the long run most firms either die or get absorbed. There is a well known term for it if they all get absorbed by the government.

Firms are like people they ought to be allowed to die in dignity. We've said it before and we will say it again. Despite all the monetary global madness nothing has been fixed. Papered over maybe, but not fixed. When things get fixed there's usually some pain involved like loss of jobs or employers moving to more friendly climes.

Often doubling down is a bureaucratic form of burying one's head in the pillow and hoping the problem will either correct itself or, like my old girlfriend, just go away. She didn't. And neither will these long-festering problems. Tons of global jobs have already been lost in the weak economy. What the Chinese and others are doing is making it even weaker by boosting more capacity without requisite demand.

As Einstein noted: "You can't solve a problem with the same consciousness that caused it." A change of consciousness for these blokes would be to stop kicking the can and claim it. You caused it, you own it. You screwed the pooch.  This is in part what the upcoming election in the U.S. is about. It's what Brexit is about. It's what Grexit is about. And it's what given the circumstances today things should be about.

If you let the MSM shills tell you otherwise you become just another accomplice in the kick the can game. At the risk of exhuming Keynes' spirit one more time, sooner or later unless there's some drastic changes, the global economy will do it's best impression of an old jingle for a popular U.S. breakfast cereal years past.. It will go snap, crackle and pop.